Chamber and committees

A lot of very good ground has already been covered, and I have been listening intently. I want to mop up a few other areas where you might share your wisdom.

First, there is an overarching discussion about how we define fuel poverty in the modern world. The technical definition is that a household is in fuel poverty if it spends more than 10 per cent of its net household income on fuel/energy consumption. As we know, if that figure reaches 20 per cent, a household is defined as being in extreme fuel poverty. It does not take very much to fall into that category. Even someone on a fairly substantial income who might be in a higher tax bracket could quickly find themselves in a position in which their annual fuel bill was £2,500 or £3,000, which would very easily take them into that situation. Are you worried that there is an assumption that people on very low incomes or people on various benefits are the sole victims of the current fuel poverty situation?

Thank you. I appreciate that we are out of time, convener, so I will park my other questions.

Thank you, convener, and good morning, colleagues. I have no relevant interests to declare.

Thank you. I, too, look forward to it.

I will perhaps come on to that volatility. Your opening comments—repeated in the opening paragraphs of your report—gave quite a broad-brush overview in using phrases such as “continuing economic uncertainty”, “tax policy divergence”, “weaker economic performance”, and so on. Those are quite generic terms. What specific work has Audit Scotland done on the root causes of why that figure of £390 million was so vast?

I have been thrown in at the deep end. Thank you, convener, and good morning to our panel.

Before I move on to my line of questioning, I might just conclude the previous one. We have had a bit of discussion about the variance in outturns versus forecasts. That flags a concern to me with the 2022-23 estimation from HMRC of £14.9 billion and what variance we might see in that outturn. Surely there can only be one data set at the core of all this. No matter who you speak to—the Fiscal Commission, analysts, policy makers or HMRC—I presume that they are not using different data sources, so a robust set of data that can help to produce the forecasts must sit at their core. Given the huge variance in outturns this year, can we be confident that the data set and the analysis of it are sufficiently robust for policy makers and analysts to produce the forecasts that affect decisions about tax rates, for example?

Specifically and in comparison, is it possible to quantify that underperformance in numerical terms?

I suspect that one of the biggest areas of interest, and perhaps concern, on the part not just of the committee but of the Government relates to the effect of tax divergence—Scotland having differential rates compared with the rest of the UK.

You state that, broadly, historically speaking, there has been little divergence, but that it has increased for this tax year and that it might increase in future tax years. The known unknown is what effect that will have on people’s behaviour and how it will affect the tax base and the resulting tax take.

What work has Audit Scotland or the NAO done on understanding how any such behavioural impact will affect the final outturn numbers? What are the risks? How high or low are they?

We know what some of the risks are, as they are well documented and are talked about often. However, quantifying those risks will be difficult until we see what people start doing with their money. Let us take, for example, the scenario of a person who earns £50,000. Such a person would pay 20 per cent more tax in Scotland than they would do elsewhere in the UK, which is a substantial difference. The number of people who are affected in that way must be easy to find out, but it might be more difficult to forecast what they might do. I guess that that is part of the problem. One presumes that, if there is a huge shift in behaviour, that will affect future budgets and how much money is available to the Government. Is that fair to say? Is that a risk in how we forecast budgets?

We do not want to do that, of course.